On Wednesday, Goldman Sachs reaffirmed its Sell rating on Manpower Inc . (NYSE:MAN) stock, maintaining its $68.00 price target. The firm's analysis highlighted persistent challenges in the French temporary staffing market, a significant segment for Manpower, contributing to approximately 25% of the company's total revenue.
Manpower's exposure to the French market is under scrutiny as recent PRISME data indicated a continued decline in temporary job positions in France. The third quarter of 2024 saw an average year-over-year drop of 7.7% in temporary jobs, with monthly decreases of 7.9% in July, 6.7% in August, and 8.4% in September.
Although the third-quarter contraction was less severe than the 9.0% downturn in the second quarter, the two-year trend analysis suggests a deepening problem.
Goldman Sachs' regression analysis, which compares PRISME data with Manpower's revenue growth in France since 2000, reveals a strong correlation and points to potential risks to the company's third-quarter estimates and the broader consensus for 2024.
The investment firm also expressed concerns over the near-term outlook for the Southern and Northern European markets. Manufacturing Purchasing Managers' Index (PMI) trends have been showing sequential contractions in key economies such as the UK, Italy, and Germany up to September 2024. Given Manpower's focus on European industrial temporary staffing, these indicators could signal further headwinds for the company.
In summary, Goldman Sachs' stance on Manpower Inc. reflects apprehensions about the ongoing weakness in the European temporary staffing market, particularly in France, and the potential impact on the company's financial performance.
In other recent news, ManpowerGroup (NYSE:MAN), a prominent workforce solutions company, has reported mixed results for its second quarter earnings of 2024 amid global economic uncertainties. The company experienced a 3% year-over-year decline in revenue, which reached $4.5 billion, and a 9% year-over-year decrease in adjusted EBITDA, which totaled $112 million. Despite these challenges, ManpowerGroup remains cautiously optimistic, emphasizing a strategic focus on diversification, digitization, and innovation.
The company's performance varied across regions, with the Americas segment showing a 5% revenue increase, while Southern Europe and Northern Europe faced revenue declines. ManpowerGroup anticipates a challenging third quarter with expected revenue declines and continued low levels of permanent recruitment activity. However, the company is investing in AI and sustainability initiatives as part of its strategy to navigate these challenges.
Analysts have noted that ManpowerGroup's brands, including Manpower, Experis, and Talent Solutions, experienced decreases, with Experis and Talent Solutions down by 7% and 9% respectively. Despite these downturns, the company noted stability in the US market, particularly within the Experis and Talent Solutions businesses, and highlighted healthcare IT as a US strength. These developments indicate recent trends and factors influencing ManpowerGroup's performance.
InvestingPro Insights
Adding to Goldman Sachs' analysis of Manpower Inc. (NYSE:MAN), recent data from InvestingPro provides additional context to the company's financial situation. Despite the challenges highlighted in the European market, Manpower's dividend yield stands at a notable 4.32%, with the company having raised its dividend for 13 consecutive years. This suggests a commitment to shareholder returns even in the face of market headwinds.
InvestingPro data shows that Manpower's revenue for the last twelve months as of Q2 2024 was $18.23 billion, with a revenue growth of -5.14% over the same period. This aligns with Goldman Sachs' concerns about the company's exposure to weakening European markets. However, an InvestingPro Tip indicates that net income is expected to grow this year, which could provide some optimism for investors.
The company's P/E ratio (adjusted) for the last twelve months as of Q2 2024 is 18.46, suggesting a more moderate valuation than the unadjusted P/E of 76.02. This discrepancy might be worth exploring for potential investors.
For those seeking a deeper understanding of Manpower's financial health and market position, InvestingPro offers 6 additional tips, which could be valuable in light of the current market conditions and Goldman Sachs' analysis.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.